Sunday, June 14, 2009

The Coming Hard Sale of Good Times

President Obama badly wants to create an improved economic reality. Pumping trillions into various government programs clearly helped stem the bleeding. What happens when the tourniquet is removed? Will markets return to their unstable state of summer/fall 2009?

Dollar fear is back, turning oil into a dollar hedge instead of an energy product. Naked credit defaults swaps remain a "risk management" tool, which is patently laughable. Securitization has been restarted with taxpayer money. The types of credit being packaged is due to expand.

Derivatives took down Lehman Brothers overnight. They would've wiped out AIG, if not for hundreds of billions of taxpayer money. They remain a dangerous product, especially when combined with securitization. Is it safe?

Not to worry. This Wednesday President Obama will tell us "financial regulatory reform" will make things safe. It ignores that greed is back, with a tad less leverage, much of it taxpayer supplied.

The new President is much like the old in practice, but he sells a whole lot better. His promises sound good, but Obama's implementation is Bush quality corporafornication. Sad days, indeed...